Financial security

david78

I think saving 10%-15% of your net earnings is a very good start. I do worry though that many people just put all of there monthly savings into cash accounts. I think people should put some of the money into investment funds each month.

dunstonh

I think saving 10%-15% of your net earnings is a very good start. I do worry though that many people just put all of there monthly savings into cash accounts. I think people should put some of the money into investment funds each month.

Agree.

I think this is a fallback to the PEP days when the average person would put all their money in one fund with a provider.  When it dropped, many got scared, pulled out and vowed never to return.

What they should have done is have a portfolio of funds within the product which have a range of investment areas so they are not exposed to one area.   Also, with fund supermarkets you can spread it round not only investment areas but investment companies all in one product.   Not forgetting asset rebalancing annually which could have been very useful to those with stockmarket funds over the last 5 years.

Tayus

Right so what your saying is i should have a portfolio of investments, where as at the moment i only have savings accounts. what other areas should i look at??? i cant have an isa until next year because i messed it up this year.... dont ask!

cloud_dog

Tayus

Having read all the above I still think you should focus on your debt. Investments are good (and you can afford to look at the longer term with investments) but I think debt can drag you down and it is something you can get used to uless you make a concerted effort to get to grips with it.

The credit card debt. if this is on a normal cc I suggest you transfer it asap onto a 0% interest cc, or at least one with a v.low interest rate.

I would look to pay off / significantly reduce my overdraft using savings. You should also be able to use the savings from the cc to reduce the overdraft amount.

Once the 0% interest rate on the cc is up either transfer it to another one or focus on reducing / paying it off.

All of the above is suggested without know what interest rates you are currently paying. Once your debt is in check (or nearly gone) then you should look at regular savings / investment.

One of the reasons I suggest this approach is because I think accepting debt, i.e. not having debt that actually enhances your wealth) can become an acceptable state of mind and then you find it increasingly difficult to reduce your debt.

Loaded_Bachelor

This may sound like an off the wall statement and possibly require some lateral, or slightly mad ::), thinking to appreciate but...................

I feel that in ones embryonic saving years or if you are a bit older but are in financial recovery of some kind, that it can be beneficial to run both debt and savings at the same time even if the debts are at slightly higher rates than you are getting on your savings. (By slightly I mean by no more than 2%)

The reason I say this is that providing you remain very disciplined on the savings side of things, having debts and paying them off each month in effect forces you to save because you are reducing the debt each month and your savings are either creeping up gradually with interest or going up even more if you can afford to save a little on top of meeting your debt payments.

On the other hand, if you decide to settle your debt with your savings and this causes your savings to vastly reduce then psychologically you might lose heart, motivation and possibly discipline on the savings side of things. Okay this would all be in the mind but most things are really.

Other advantages of retaining debts equal to your savings, providing the debts are neither interest front loaded or at big rates, are 1) that you are in effect retaining an instantly accessible line of credit (i.e. your savings) which can be used in an emergency. 2) Your credit rating increases every time you meet a loan or credit card payment. 3) You have something to balance transfer at 0% on to another credit card.

Of course its great to owe nothing and have big savings but you'll find that even the biggest companies and richest individuals are running debts somewhere as long as it is strategically sensible for them to do so.

Yorkieds

I agree LB,

It is not possible to live your life without some form of debt.

The biggest debt for most is when they get onto the property ladder and this is often only relieved when downsizing .

The ability to save larger amounts is more achievable in later life when you hopefully have more diposable income.

YDS :-/

Tayus

i agree!

Leia_Stephens

Tayus, are you thinking of taking the advice of cloud_dog, Joe_Bloggs and others, and paying off your £3,300 debts with some of your savings ???

Leia

Leia_Stephens

The reason I say this is that providing you remain very disciplined on the savings side of things, having debts and paying them off each month in effect forces you to save because you are reducing the debt each month and your savings are either creeping up gradually with interest or going up even more if you can afford to save a little on top of meeting your debt payments.
quote]

I like these sentiments, Loaded_Batchelor
From now on (I made a couple of purchases on my card :-[ recently), my monthly cc payments will always be reducing my £1,366.66 debt - I received a statement this morning - but my savings are still going up gradually each month too (because I am continuing to drip-feed my ISA with £25) ;D.

Leia

Tayus

no, i intend to keep my savings intact ;D and pay off my overdraft using self discipline! i am in the process of switching my cc to a 0% one as well.